Bill would let taxpayers file online for free

IRS Oversight Board 2006 Electronic Filing Report to Congress

Sen. Daniel Akaka (D-Hawaii) has introduced the Free Internet Filing Act, which would let all individual taxpayers electronically file their returns directly and for free through the Internal Revenue Service’s Web site.

Taxpayers must pay a third-party transmitter or professional tax practitioner to submit returns. Some individuals who meet eligibility requirements may take advantage of free e-filing through the Free File Alliance available on the IRS Web site.

The legislation, which Sen. Jeff Bingaman (D-N.M.) co-sponsored with Akaka, was sent last week to the Senate Finance Committee, which oversees the IRS.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Sen. Charles Grassley (R-Iowa) have supported a free e-file capability for the IRS and have co-sponsored bills that included a free IRS e-file Web portal.

The agency has said e-filing helps taxpayers receive their refunds faster and reduces errors and agency administrative costs. Free e-filing would boost the number of e-filed returns, Akaka said.

“If taxpayers take the time to prepare their own returns, they should have the right to file electronically, directly with the IRS,” Akaka said in a statement. “Taxpayers should not be forced to share their private financial information with a third-party company in order to file electronically, especially in this era of increasing identify theft.”

Several consumer groups support Akaka’s bill, including the National Consumer Law Center and the Consumer Federation of America.

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